The Hindu Business Line : MLR Motors in talks with European co for `small car'

MLR Motors, a venture promoted by the Hyderabad-based Lokesh Machines Ltd, is in parleys with a European carmaker to set up a greenfield car plant in Andhra Pradesh with an outlay of Rs 1,250 crore.

Mr Lokeshwara Rao, Managing Director of Lokesh Machines, a machine tool manufacturer and supplier of engine blocks to automotives in India, said the company was negotiating with the State Government for some incentives and allotment of land either at Tada near Nellore or near Visakhapatnam.

The Andhra Pradesh Chief Minister, Dr Y.S. Rajasekhara Reddy, while reacting to the German company Volkswagen deciding to set up plant in Maharashtra, on Monday announced that MLR Motors has approached the State with a plan and that they would allot about 250 acres for the proposed plant.

Speaking to Business Line, Mr Rao said, "They were keen on the project and preferred not to disclose the strategic partner till firming up other issues with regard to manufacturing unit. Once the land is allotted, we expect to complete the project within 18 to 24 months."

"Incentive package is key to the success of such a car plant in India. Even large car companies such as Volkswagen, Tata Motors, M&M seek some concessions, and for us this would be a major factor for the success of the company," he said

Mr B.V.R. Subbu, former president of Hyundai Motor India, is the company Chairman and is personally supervising the details of the project. "We have been in negotiations with a European company, and are working on designs that conform with Indian requirements. This means fine-tuning the designs for local requirements. The proposed car would be a `small car' that would be bigger than the Maruti 800, Alto and Santro, and slightly smaller than the Indica. This would be diesel powered," he said.

The company is in the process of evaluating design-related issues as it will take at least two years for the rollout.

According to industry sources, MLR Motors is obtaining the patent for the Uno platform from Fiat of Italy. The company is also likely to approach an international design house for re-design. Efforts were also on to approach FEV of Germany, a leading company that specialises in design and development of internal combustion engines, to re-design the 1700 cc diesel engine that came fitted in the Uno in India, before its production was stopped, the sources added.

Mr Rao said that the company plans to bring in private equity, term loans and would part-finance the project through Lokesh Machines, a profit-making company.

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